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Financing a House Purchase

Purchasing a home is one of the most exciting experiences in your lifetime. But it can also be stressful.  Arranging the financing to purchase a home is a unique experience that can affect your life for years to come. So it is critical that you get this one step right.

Introduction:

Financing a House PurchaseBuying a house is the ultimate dream of many families. It is one of the largest assets possessed by a person in his lifetime. So it is a big step for most people.  One major question for the prospective buyer is how to arrange financing when buying a house?

Considerations When Arranging Bank Financing

The key factor when arranging a purchase is the affordability of your monthly payments which are themselves determined by a variety of factors including the purchase price, the term (length) of the loan, the interest rate and any required taxes, insurance and fees. Currently interest rates are at historic lows so it is much easier to afford a home. House prices are also just coming off the lows due to the 2008 sub-prime housing crash so houses have never been more affordable. But interest rates are starting to rise so housing costs will begin to get more expensive.

Factors to Consider When Owning a House

There are certain factors to consider when purchasing a new house.

  • The prospective buyer must check the amount of the down payment that he or she is required to make at the time of buying a house. Depending on the type of loan you get, the percentage of down-payment you are required to make will vary.
  • To get the most favorable terms, it is necessary to maintain a high credit score. The higher your score the better the deal you can get.
  • The higher the down payment you make the less you will pay in overall interest and the better the interest rate you will qualify for. If your down-payment exceeds 20% of the house cost you should be exempt from paying for mortgage insurance thus reducing your monthly payment even further.

Other Considerations

It is essential for the prospective buyer to be aware of certain factors before buying a new house. Often houses are cheaper due to lack of various amenities and facilities that might make it more expensive in a long run. For example: Even though the house is less in price there could be other factors that increase your overall costs. If you have to drive long distances to the market, school and the workplace the additional travel can prove expensive. If it needs major upgrades your initial costs may be lower but your overall costs may be higher. If the house isn’t well insulated or naturally cooled, heating and/or cooling expenses may drive up your operating costs. When calculating what you can afford, don’t forget your other expenses such as maintenance, insurance and taxes as well.

Selecting the Loan Provider

The vital factors to consider when choosing a loan are:

  • Terms and conditions offered including the fine print for foreclosure.
  • The amount of down payment and its proportion to the entire loan amount.
  • Principal repayment terms, interest rate, mortgage insurance,  if any.
  • Discounts offered by the lender.
  • Any hidden costs, or a processing fees.

Finding a reliable and a reputable home loan provider is essential. Having a good real estate attorney working for you will ensure that you have not missed any key factors.

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Author bio:

Madhumay Mallik is a content writer and photographer specializing on home improvement and architectural building ideas. He has been working for more than 5 years now to bring the most unique ventures to light. He recommends: Before arranging finance for house purchase in Tripunithura, these factors should be considered by the buyer.

Everything mentioned above is his answer to questions about how to arrange finance when buying a house.

Image courtesy of jannoon028 / FreeDigitalPhotos.net.

 

Comments

  1. Structural Engineer In Hyderabad says:

    Really got a lot of information from this post. I thought this article is so good.

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